For sale: Cisco data centre rival Brocade

Jim Duffy |
Oct. 6, 2009

Brocade has reportedly put itself up for sale, a development that portends significant consolidation within the data centre IT industry.

A dark horse in the Brocade stakes would be Juniper, according to investment firm UBS. Juniper and IBM are tightly aligned in data centre and cloud computing, and a Brocade acquisition would flesh out much of what's missing in the IBM/Juniper data centre arsenal -- specifically, an FCoE line of switches.

"We believe Juniper may be another potential buyer of Brocade, although recent commentary from Juniper suggests it is not looking at large deals now," UBS analyst Theodosopoulos states in a bulletin on the prospects of a Brocade acquisition. "An acquisition of Brocade would make sense for Juniper, in our view, because it is the only other clear networking partner for IBM, while IBM is currently supporting Juniper's development of an FCoE switch, alleviating some of the R&D budgetary constraints on Juniper as it pursues both LTE & FCoE technologies."

Juniper has a major announcement slated for Oct. 28 in New York. Speculation has it the company will flesh out its Project Stratus cloud computing strategy and/or announce a significant alliance or acquisition with a major IT player.

IBM may also be interested in Brocade but that would dash its Juniper partnership, kill HP and EMC as 10 per cent revenue customers, and get IBM back in the network and SAN hardware business which may not appeal to the company, Kidron notes.

Another wild card is Dell. Acquiring Brocade would give Dell, a maker of servers for the data centre, more credibility in that market with minimal overlap, according to Kidron. But Dell just acquired Perot Systems last month for $4 billion so the prospects of making another major acquisition so soon after is remote, Kidron states.

That doesn't necessarily rule them out though.

"I think Dell could potentially make a play for them; I've heard through some of their channel that there is a big push for capturing some [data centre] share," says Frost & Sullivan analyst Vanessa Alvarez.

No deal is imminent for Brocade and the company could still dash a potential deal, the WSJ reports. But proactively seeking out possible acquirers may give the company more control over the process and over its destiny, observers note.